OPEC sees growing supply threat from rivals beyond U.S. shale

OPEC’s latest forecasts suggested a weaker outlook for global oil markets this year as surging supplies from competitors from Norway. They still committed to meeting in March to decide on future production policies. OPEC set to further lose market share in 2020. Brent gives up all gains made after Iranian general killed. Angolan output posts biggest rise after maintenance.

Guyana threaten the group’s efforts to defend crude prices. Brent crude was up 16 cents, or 0.2%, at $67.36 a barrel by 0155 GMT. The organization and its allies which together account for about half the world’s oil output are embarking on a fresh round of production cuts. The Trump administration on last Thursday renewed a waiver for companies to wind down transactions.

Another year of booming rival supplies threatens to unleash a new glut. Investors on edge for clues on Sino-U.S. trade negotiations. OPEC’s latest monthly report shows their challenge extends far beyond the shale patch of Texas and North Dakota. Citing an unnamed source from The Organization of the Petroleum Exporting Countries.

The low interest rates may further spur non-OPEC output. U.S. crude inventories unexpectedly rose last week. The Organization of Petroleum Exporting Countries boosted forecasts for growth in output from non-members in 2020. U.S. job growth slows in December (Updates with settlement prices). It had imposed sanctions in September for allegedly transporting Iranian oil.

Offshore projects once seen unfeasible in an era of lower oil prices take off. Oil fell below $65 a barrel on last Friday in its first weekly loss since late November. OPEC oil output fell in December as Nigeria and Iraq adhered more closely to pledged reductions. The waiver good until Feb. 4, 2020, allows activities and transactions “ordinarily incident.

America will still account for almost two thirds of the new output. West Texas Intermediate was up 20 cents, or 0.3%, at $61.31 a barrel. Although the group raised estimates for world demand, rival supplies will grow about twice as fast. Oil prices continue to show year-end strength supported by a combination of definitive progress on the U.S.-China trade deal.

It necessary to the maintenance or wind down of transactions including offloading of non-Iranian crude oil. However, markets were still eyeing the longer-term risks of conflict. It pointing to a stronger performance for oil prices in Q1 than anyone had thought only two months ago. The potentially derailing the coalition’s strategy to maintain oil revenues for its members.

Rising non-OPEC output undermine efforts to limit supplies. Company expectations are for the meeting to be a positive meeting. Brent crude, the global benchmark, settled at $64.98, down 39 cents. Crude futures are trading near $64 a barrel in London, close to the lowest in a month. The 14-member Organization of the Petroleum Exporting Countries pumped 29.50 million barrels per day.

Flaring tensions between the U.S. and Iran rekindled fears of a major supply disruption. That is down 50,000 bpd from November’s revised figure. The Trump administration reimposed sanctions on Iran’s oil exports last year after unilaterally withdrawing from a 2015 deal. Oil prices slipped on last Tuesday for a second straight session as the cons of a slowing global demand.

OPEC and allies including Russia and Kazakhstan are deepening production cutbacks made last year. West Texas Intermediate crude fell 52 cents to end at $59.04. The Trump administration has sought to cut Iran’s crude exports to zero. OPEC’s agreement with associated producers at the end of last week to deepen crude output cuts in early 2020.

It remove excess global inventories, pledging overall curbs of about 2.1 million barrels a day. OPEC expects lower demand for its crude oil in 2020 even as global demand rises. Crude prices have rallied to above $70 a barrel in 2020, extending a 23% gain in 2019, supported by ongoing OPEC. This month’s report suggests those measures should be sufficient to deplete stockpiles during the first quarter.

China has been a stubborn customer of oil from the OPEC member. Rival producers grab market share and the United States looks set for another output record. The surplus will probably return in the second. U.S. President Donald Trump said on Tuesday he and Chinese President Xi Jinping will have a signing ceremony.

Saudi Arabia, the group’s biggest member and de facto leader, rushed to implement almost all of the additional reductions pledged. A tense waiting game has begun to see if the fallout will lead to a disruption in regional oil supplies. WTI had a 6.4% decline, with both benchmarks. The new agreement even took effect, the report showed. Brent futures were down 14 cents, or 0.2%, at $64.11 per barrel by 0450 GMT.

The kingdom reduced output by 111,000 barrels a day in December to 9.762 million a day. Prince Abdulaziz bin Salman, also said on Monday that OPEC+ will meet in March. The roughly 17-month trade war hit global economic growth and demand for oil, leaving prices range-bound for the most of the year. Concerns about the sanctions caused a spike in shipping rates for oil and liquefied natural gas.

As a result, the organization’s total production fell to 29.44 million a day last month. The United States, which has seen its output soar in recent years powered by shale. Lower demand also rendered supply cuts by the Organization of Petroleum Exporting Countries. If other nations implement just part of their pledged reductions, output should be near the average of 29.19 million a day.

The so-called OPEC+ grouping agreed in November to extend and deepen production cuts. The waivers apply to COSCO Shipping Tanker (Dalian) or any entity owned 50% or more by the company. However, even full compliance won’t prevent stocks building up in the second quarter. U.S. producers, not party to the OPEC+ agreement, have been pumping record amounts of oil.

The requirement for OPEC’s crude drops to 28.56 million a day. The euphoria (on output cuts) was short lived, with an unexpected fall in exports from China. The Organization of the Petroleum Exporting Countries forecast in its market report. Growth in production in the U.S. is forecast by many to slow. OPEC and its allies agreed in December to reduce supply by 1.7 million bpd in 2020.

The full alliance is due to meet in early March. At meetings in December, OPEC+ agreed to make an additional cut of 500,000 bpd as of Jan. 1, 2020. Data released on last Sunday showed exports from China in November fell 1.1% from a year earlier. The agreement is due to expire, to decide whether to continue with the strategy.

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